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The state’s in-house banker looked at the repayment promise that the Oregon Department of Forestry offered in exchange for a $60 million loan and said, “No.”
That’s the takeaway from email correspondence between the Oregon State Treasury and ODF that WW obtained through a public records request.
As WW reported earlier, the ODF approached the treasury for a loan last month after a record-setting wildfire season left the agency with a stack of unpaid invoices and a pile of IOUs from federal agencies. It is often the case that the department, which leads the state’s response to wildfires, hires contractors to do the work, then bills the federal agencies that own the land where many fires occur. (ODF last sought a state loan in 2020.)
This year’s fire season, which saw nearly 2 million acres burn, cost $133 million—more than twice the previous high and far more than the agency budgeted. In October, ODF asked to borrow money from the treasury, which in addition to managing state pension funds, administers the Oregon Short-Term Fund, a pool of money in which agencies park cash they don’t immediately need. In certain circumstances, the treasury can lend money to state agencies from that fund—but it has to be certain the loans will be repaid.
Related: Oregon Department of Forestry Asks Treasury for $60 Million Loan
The correspondence shows that treasury officials worried about the ODF’s reliance on future funding from the Legislature. It is a fundamental tenet that one legislature cannot obligate a subsequent legislature. In other words, the lawmakers who take office in January are not bound by anything the current crop promises.
“As you know, potential future legislative actions generally cannot be considered a part of the pledged revenue streams backing up the request as they don’t meet the ‘certainty of repayment provisions of the program,’” treasury finanace director Cora Parker told ODF officials in an Oct. 16 email.
Parker asked the department for details of expected payments from federal partners and other sources of revenue. But after meeting and exchanging information, she and her treasury colleagues determined the collateral for the loan was not sufficient to protect taxpayers’ dollars.
“Your request to borrow funds under ORS 293.205 to ORS 293.214 is denied due to inability to demonstrate repayment without additional legislative action,” Parker wrote to ODF on Nov. 15.
Forestry spokeswoman Joy Krawczyk says her agency will now ask lawmakers for the money instead. (The Legislature’s Emergency Board has the flexibility to reallocate money that has been earmarked for particular uses but not yet been spent.)
“We’ll be requesting an additional $83 million from the Emergency Board during December Legislative Days to increase the cash we have available to pay our vendors,” Krawcyzk says. “That amount represents the remainder of the state’s net portion of wildfire costs for the 2024 fire season. These dollars will not cover the state’s entire obligation but will help keep payments moving until we can request additional funding to assist with gross fire season costs that still need to be paid out while the state awaits reimbursements.”